Unemployment could be set to fall to levels not seen since the 1950s as Britain’s jobs market continues to boom.
In a major vote of confidence for the economy, Oxford Economics, one of Britain’s most respected think-tanks, says the jobless rate could fall to levels not far off the 2-3 per cent average of the 1950s and 1960s.
While the UK economy has got off to a slow start to the year, unemployment is at its lowest level in 43 years – and is much lower than in the eurozone, where the number of people out of work is painfully high.
Unemployment could be set to fall to levels not seen since the 1950s as Britain’s jobs market continues to boom. Stock photo
Unemployment fell to 4.2 per cent in the three months to February, the lowest rate since 1975, according to the Office for National Statistics – less than half the 8.5 per cent jobless rate on the continent.
The latest figures show the number of people in work rose to a record high of 32.26 million – up by 427,000 compared to a year ago and by 505,000 since the Brexit vote.
But Martin Beck, the chief UK economist at think-tank Oxford Economics, says there is a chance the UK could ‘return to genuine full employment’, providing a major boost to Britain’s jobseekers.
He argues the current UK jobs market shares parallels with that of the 1950s and 1960s, when unemployment averaged 2-3 per cent and peaked at 3.5 per cent in 1969.
Unemployment is at its lowest level in 43 years – and is much lower than in the eurozone, where the number of people out of work is painfully high. Stock photo
In 1955, the proportion of the population out of work sank to just 1.55 per cent as the then Government, led by Prime Minister Anthony Eden, made boosting employment one of its top priorities.
Back then, as it is now, wages went through a prolonged period of rising more slowly than output, meaning it was cheaper and more attractive to businesses to hire workers.
Between 2010 and 2017, real wages fell by an average of 0.3 per cent a year, while productivity grew by an average of 0.7 per cent a year.
With unemployment at its lowest levels in 43 years, experts believe wages will pick up and exceed productivity in the next few years – but only marginally, therefore keeping Britain’s jobless rate down.
Mr Beck said: ‘If the factors holding back pay were to persist, alongside a catch-up in the UK productivity, a return to a 1950s and 1960s jobless rate is possible, provided that the Bank of England did not take fright at further declines in the unemployment rate.’